Kerry O'Brien (Tasmania, Australian Labor Party) Share this | Hansard source

There is no doubt that reaching this surplus goal will be a difficult task. It will require a disciplined approach to spending and a very hard-nosed approach to savings. We are working hard to pare back the excesses of the former government. We are working at cutting wasteful spending and we are working to find additional savings over and above the $10 billion that Labor identified prior to the last election.

This government will not go down the same road the now opposition did when they sat on the treasury bench and simply rely on surprise upward rises in revenue. We are not going to be a government that depends on the surplus being driven by growing revenues. The Howard government did not have the discipline to budget for a fiscal target of 1.5 per cent of GDP. In the 2007-08 budget, the surplus for 2008-09 was projected to be 1.1 per cent of GDP—so much for a 1.5 per cent target. At the time of the Mid-Year Economic and Fiscal Outlook this was revised upwards to 1.2 per cent of GDP. Remember: this was not planned in the budget; this was because there were other factors and growing revenues.

Australia needs to do better than that. So long as economic conditions hold up, under Labor we will do better than that. This government has set a target of 1.5 per cent of GDP, and, to the extent that we need to tighten our belts, we will be doing that. The Treasurer will be making those announcements in relation to the outcome on budget night. I venture to say that we understand that the Australian people expect better of their government than they had under the previous government. Families will not thank a Labor government if we continue to run the lax fiscal policy of the previous government that led in part to eight interest rate rises over the last three years and 11 rises in a row.

Through the past 100 days in office, this government has been working hard on the task of building a stronger, more modern economy. I have touched on the point of fiscal restraint, but we are also looking at fast-tracking measures to address skill shortages, including rolling out 450,000 new training places and 6,000 more skilled worker visas. We are also working to address critical infrastructure bottlenecks through the formation of Infrastructure Australia to prioritise and fast-track key projects. We are also looking at some very important savings initiatives to provide more incentives for saving, because we need to encourage Australians to save more. This includes the First Home Saver Accounts, which commence on 1 July. They will be very important for young Australians in building their deposits so that they can participate in Australia’s real estate markets, many of which are beyond the affordability of many young Australians.

We also want to develop new participation incentives, including the government’s personal income tax reforms and, in addition, the 50 per cent childcare rebate. They are positive initiatives and part of the plan we have to build a strong economy, while dealing with some of the challenges the economy faces because of the profligacy and neglect of the previous government. To build a stronger, more productive economy, we need a new partnership with state governments to further drive economic reform. The government has already negotiated streamlined specific purpose payments to the states, freeing up resources to deliver better services through outcome based payments. To build a stronger economy, we need a more competitive taxation system. The reforms introduced into parliament are expected to deliver an additional 2.5 million hours of work to the economy each week.

Further, to build a stronger economy, we need a competitive, well-capitalised financial sector with measures implemented to increase competition and allow banking customers to look at the ways they can change their financial provider if they are not getting the best deal that is available in the market. That will encourage competition and a better deal for consumers. These are all reforms that Labor has introduced in its first 100 days of office—things which, I remind the Australian public and the Senate, the former government failed to do in 11½ years.

When the coalition come here with a proposition which talks about impending budget cuts, as if they have no responsibility for the conditions that require attention to the spending of the Commonwealth, they really do have a cheek. In terms of the so-called cuts to programs, let me say this. When the coalition failed to include programs in their forward estimates and made commitments during the caretaker period and then expects a subsequent government simply to say, ‘That’s a commitment of the former government; we will not assess it and we will not make decisions in the budget context having regard to all the information available and to all of the interest that might potentially have access to certain funds,’ then they are wrong to think that we would fall for that trick. We, Labor, will make assessments on the basis of the best information available and the best bang for the taxpayers’ buck in those expenditures.

There were some questions raised about consumer sentiment. We expect consumer sentiment to be affected after eight interest rate rises in the last three years—eight rises in a row. There has been a great deal of consumption in the economy. The former government were keen to encourage spending and, frankly, did very little to remind the Australian public that there is a settling day and that at some time interest rates will go up. One wonders, in the context of eight interest rate rises in a row, why they were so reluctant to say that, but they were. It is completely understandable that consumer sentiment would be affected by a tightening of fiscal conditions, by an increase in interest rates and, therefore, by an increase in the cost of borrowings and the ultimate overall cost of commodities, property and other items that consumers have been spending on over the years.

It is also true in the domestic context of eight interest rate rises in a row that we find ourselves in challenging times in the global economy. That is why we have to modernise our own economy—so that it is strong and flexible enough to meet the major economic challenges we face. Both domestically on the inflation front and globally on the uncertainty front, we need an economy that is able to respond. Figures out today show that a lot of families around Australia are doing it tough on the back of eight interest rate rises in the last three years. That is why it is so important that we have a commitment, as this government does, to tackle the inflation legacy of the previous government, to put downward pressure on interest rates in the long term.

Our immediate goal is to strengthen the budget position and to target investment in key drivers of productivity, especially infrastructure and skills. Again, apparently, the shadow Treasurer does not think we have a skills problem. We heard that in question time today. What a remarkable statement to have made. Anyone who has been talking to business in the various sectors of the economy around this nation over the last three years and has come to the conclusion that there is not a skills crisis either has a hearing problem or just does not comprehend the words of Australian business, because those words have been resonating loud and clear for some years.

In the agriculture sector, everywhere you go the farming community is talking about skills problems. They are talking about the availability of labour. They are talking about having to compete with other sectors drawing away labour because they can offer greater salaries. It is a great challenge for a very important sector of this economy. You would have thought that, if the coalition had any concern for that sector, they would have done something about it—but, no, they did not. More to the point, they currently do not believe that there is a problem. I wonder what the farm sector of this country thinks of the shadow Treasurer when he says that they are imagining the skills crisis they are experiencing. I venture to say that Mr Turnbull has absolutely no credibility with that sector of the economy. He would not have any credibility with the mining sector of the economy either.